Tax saving options under Section 80 C

Dear Friends,

In this season of Income Tax Return (ITR), I am here to share with you some tax saving options. As per the Income Tax act, you can invest upto Rs. 1.5 lakh for the Financial year 2016-17 and can claim tax rebate on the same. There are various instruments in which you can invest as per you risk profile, age and time horizon of investment.

Unlike previous years when interest rates were set for the full year, the government will from now on set them every quarter, based on the previous 3-month yields on Government-Securities or G-Sec.

My thinking is you should not invest randomly at the last moment just for the sake of Tax saving , Rather you should plan it logically at the start of Financial year and invest properly. This will have 3 benefits:

a)     When you plan and invest there is very less chance of you getting trapped in some unwanted tax saving instruments for long term.

b)    You save tax.

c)     This will help you to save and grow your money for your goals rather than random saving and spending at maturity.

Below is the list of Tax saving options available under section 80C

	Return (as on April 1, 2016)	Lock in period	Liquidity	Tax Treatment	Minimum Investment	Maximum Investment
Public Provident Fund (PPF)	8.1%	15 years	Very low. Money locked for 15 years, Partial withdrawal available for specific reasons after 6 years.	Exempt at all 3 levels. Investment, Interest credited and Maturity amount.	Rs. 500 per annum	Rs. 1.5lakh per annum.
Equity Linked Savings Scheme (ELSS)	Market linked	3 years	High. ELSS is having the least lock-in period among all the tax saving options.	Dividends and Maturity amount is completely tax free.	Lump sum investment = Rs 5000/- SIP = Rs. 500 or 1000	Rs. 1.5 lakh per annum
Employee Provident Fund and Voluntary Provident Fund (EPF and VPF)	8.8%	Till the age of 58	Very Low. Amount is blocked for your service tenure. Partial withdrawal available for specific reasons only.	Exempt at all 3 levels. Investment, Interest credited and Maturity amount.	EPF = 12% of Basic + DA. VPF is similar to EPF. Can be chosen by employee.	Decided by Salary structure.
National Savings Certificate (NSC)	8.1%	5 years	Low. Money can be redeemed only after 5 years.	Interest earned is taxable as per the tax slab of the individual.	Rs. 500 per annum	Rs. 1.5lakh per annum.
Tax Saving FDs	Around 7.9% (Differs slightly among banks)	5 years	Low. Money can be redeemed only after 5 years.	Interest earned is taxable as per the tax slab of the individual.	Rs. 100 per annum	Rs. 1.5lakh per annum.
Life Insurance Policies	Vary as per the tenure selected.	Variable tenure as per the selection of individual.	Low. Money returned only in case of Endowment policies.	Maturity amount and any intermediate payout is tax free.	NA	NA
National Pension Scheme (NPS)	Market Linked.	Till Retirement of Individual.	Very Low. Withdrawal possible at retirement only.	40-60% amount to be compulsorily invested in Annuities.	Rs. 6000 per annum.	Rs. 1.5lakh per annum.
Sukanya Samriddhi Yojna	8.6%	Till the girl child attains the age of 21.	Low. Investment can be done only for girl child. On the date of opening the account, the child’s age should 10 years or younger. 1.       Deposit needs to be made until 14 years from opening of account. 2.       Deposit under scheme will mature 21 year after opening of the account.	Exempt at all 3 levels. Investment, Interest credited and Maturity amount. 1. No Premature Withdrawal is permitted. 2. However, maximum up to 50% of deposit amount can be withdrawn for marriage or higher education of girl child, once she reaches 18 years of age.	Rs. 1000 per annum	Rs. 1.5lakh per annum.
ULIPS	Market linked	5 years	Low.	Completely tax free.	Rs. 2000 per annum	Rs. 1.5 lakh per annum

Select the best possible options and invest. In case you need any help, please let me know. I am more than happy to help you with you queries.

Happy Investing!